Where have all the experienced direct marketing generalists gone?

When I tour B2B catalog companies today I am struck by something that I think is very important.  That is, there are precious few people in any company who really know, in a balanced way, what is going on.

Sure, we have product wizards, catalog production experts, paid search experts, outbound telemarketing managers, fulfillment/ERP experts, etc. etc.   But where are the people who have the whole, integrated, balanced view of how the business runs?  Where are the experienced direct marketers who can review, evaluate, and assess investments across the various needs of the business? Seriously, where are they?   Look around your own organization and find those people because they are worth their weight in gold!

As our companies grow and as each area of our operations become more complex, detailed and hard to manage it is only natural that we have specialists.   What is sad is that we don’t have they complimenting generalists.   You know, those are the folks that balance the great ideas in one area with the “about to be a disaster” in another area.

I am reminded of the day that a well-intentioned bean counter made the unilateral decision to communicate to all employees that manual paychecks were no longer a payroll option.  All payrolls were to be processed by direct deposit.   Of course, he assumed everyone had a bank account just because he did.  He also incorrectly concluded that they were just too lazy to fill out the direct deposit form.   Well, that memo was regarded as a pink slip for the 130 employees who received manual paychecks.  All hecks broke loose and it took months to repair the distrust that resulted from that seemingly innocent and well-intentioned decision.   The problem really was that the author of the memo really didn’t have a clue about the nuances of the various areas of the business.  He was a specialist, not a generalist.

I sit in many client meetings and one of the pleasures of my work is that I meet many, many very bright and talented people.   It’s a treat.  However, what I don’t see are too many experienced generalists.   In privately held companies it is usually the owner and maybe one or two other long term, senior employees.   In companies that are owned by larger public companies mostly I see talented specialists in the various functional areas and limited experience “general managers” that last 2-3 years “in their current assignment”.   These folks are not generalist with experience but often reactive quarterbacks.  Mostly I see them fight fires rather than drive businesses.    I can also say that I see a direct correlation between the companies who are doing well and the ones who have 2-3 senior generalists running the place.   Look around.  Which type of company are you?

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

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B2B Catalogers/Distributors: How are your acquisition products performing?

When we review a client’s marketing effectiveness one of the discussions we always have involves the performance of their acquisition products.  About half the time we find out that the client isn’t really paying attention to their acquisition products. Most pay attention to the list or online source of new customers acquisition. That is not to say they are not paying attention to their acquisition programs (Most do a good job of analyzing the list or online source of new customers) but their analysis stops short of really understanding what products bring in what quality of new customers. Most know, for example, that a new customer acquired through catalog prospecting usually delivers a substantially higher lifetime value (LTV) that, say, a new customer acquired via organic search or an online advertising program – but that is usually where their analysis stops.   We encourage B2B Catalogers and Distributors to find out which products new customers are buying, which products attracted them to make their first purchase. Usually that’s the first line item on the order and, more often than not, the only item on their first order.   Often it’s a promotionally priced item, a frequently purchased consumable item or a “long tail” (hard to find) item.  Once a quick analysis illuminates what these products are and their relative performance in terms of sales, margin and number of new customers acquired the marketer can then leverage that knowledge.  The analysis can be further enhanced by clearly understanding variances between channels (catalog, web, etc.).

Armed with such knowledge the catalog marketer would then begin to run various tests to stimulate the results on such key new customer acquisition products.   Think about some of these ideas:

  • Giving the products more catalog space or front cover placement on your prospecting catalog.
  • Banner ads on selected key word organic search visitors
  • Promotional offers (lower pricing, 2-4-1 offers, bundles, etc.)
  • Improving social content on these items
  • Using these products in print or online advertising programs.

After such a client discussion, we normally recommend that marketers look at their products from three points of view – sales, margin and acquisition.  With that insight, they may find it actually pays (given the quality new customers acquired) to sell certain items at lower margin or even at a loss.   This is particularly true if the sale of one item has a high correlation with the sale of a complimentary or follow-on item.

So, have a look at what key items attract new customers to your business and think about how to leverage that opportunity.

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

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B2B Catalogers/Distributors: How can you fund growth, acquisitions or generational change?

As many of you know, we work with a variety of B2B catalog and distribution companies on high-level strategy issues.   Inevitably the “exit strategy” is reviewed and discussed and, often, the issue of preparing the business for sale or recapitalization. This is common when the owner is planning his or her retirement, for example.

In many cases, however, owners do not want “an exit”.  They do not want to completely sell their businesses, they simply want to create a liquidity event
for any number of good business reasons.   The reasons we see most often are the following:

1.  Buying out a silent partner or early investor who is now inactive.

2.  Generational transfer of the business.

3.  Net worth diversification.

4.  Need to create equity incentives or retirement plans for key employees.

5.  Raise capital for a relocation or new facility.

6.  Invest in organic growth.

7.  Acquisitions.

In these cases the owners are fully committed to the future of their businesses and want to remain in control and significantly involved.  They also are reluctant to take
on a new equity partner who will “slow them down” with administrative controls
and processes or burden them with additional overheads and fees.
In years past taking on private equity investors usually involved “cashing out” ,
giving up control and incurring additional administrative processes and fees but in
today’s world things have changed a great deal.     Today there are several
enlightened PE firms who will take a significant minority position and leave the
committed owner with control.  Better still, they understand the burden and potential distraction and additional cost of their involvement and have worked to reduce or eliminate such distractions and costs. It is also good to note that a very few, select PE firms has also focused on B2B distribution companies.   Most often they have other B2B distribution portfolio investments and come with relevant management experience.    Often, such expertise and their network of connections are as valuable as their capital.   Their investment brings these benefits to your business to support the execution of your strategy and growth.   It also helps develop and retain your key personnel.   These days, private equity groups are much more than “suits with money”.    They can and should become any CEOs trusted advisor and growth partner.   After all, nobody wants your success more than they do.

So, if you are thinking about creating a liquidity event for your company to help support your future vision think carefully about the kind of equity partner you want.
There are many options but few good ones. The choice is all yours and if you do it
right, the future control of your business will continue to be yours as well.

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

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B2B Manufacturers & Distributors: What is your online marketplace strategy?

We have done a great deal of work in the last year assisting B2B manufacturers and distributors develop or refine their marketing strategy for online marketplaces, particular when it comes to Amazon and eBay.   Anyone who has been following the growing important of such online marketplaces in the B2B space knows that their growth has been significant in the last five years and that grow shows no signs of letting up.   In addition, in the absence of a clear and defined strategy for marketplace selling, brand managers often find, much to their chagrin, that a selling “free for all” has erupted on the marketplaces with subsequent negative brand impacts.   Hence, increasingly, we find that manufacturers, who historically have not sold direct, are stepping in to control and optimize their brand presence on these marketplaces.

While there is no “one size fits all” strategy solution to selling on marketplaces like Amazon.com, AmazonSupply.com and eBay.com, there are several key issues or considerations that each manufacturer must come to grips with.

  1. Having a marketplace presence is increasingly important. More people who have the intention to buy something search on Amazon than Google.   Also, Amazon dominants the world of organic search.   eBay is not far behind. As such, manufacturers are increasingly thinking that you must be present to be seen, even if you don’t sell much on any particular marketplace.   Of course, most sellers want the exposure and incremental sales.   Step one is to know your market and competition on the marketplace and how it’s evolving.  Study your competitors, your distributors, comparative offers/pricing and begin to formulate your strategy and plan of attack.
  1. Know your objective. A B2B distributor usually starts off thinking that selling on a market place will be a source of incremental sales, maybe even new international sales. A manufacturer may have the objective of managing their brand, channel conflicts and pricing.  As research progresses, it becomes apparent there are many reasons why it may, or may not, be optimal to sell certain products or all products on one or more marketplaces.   Knowing your objective and refining your strategy is key before you start any course of action.   Remember, on marketplaces, like most everywhere else “you only get one chance to make your first impression”.
  1. Avoid the “commodity trap”. Marketplaces are as close to the economist definition of “perfect market” as you get.   Full and complete product/sales information is available to buyers and sellers presented in a way that facilitates shopping comparisons and transactions.     As information is near perfect, your brand and content is king – both must outshine your competitors if you are to maintain differentiation and avoid margin pressures.
  1. You will never compete successfully with Amazon. If any manufacturer or distributor sells exactly the same product as Amazon or AmazonSupply.com, usually Amazon wins.  For this reason, a key decision is whether you “sell to” or “sell through” these separate entities.     Both options have significant benefits and consequences that must be fully understood.
  1. Consider testing FBA/Amazon Prime. The only way to get access to the lucrative Amazon Prime customer base (estimated to be some 12-15 million loyal buyers that buy 6-7X a regular Amazon customer) is to sell through FBA.   It’s also a good way to learn Amazon’s logistics and compare them to your own in-house fulfillment.
  1. Read the reviews on Amazon and eBay. Amazon/eBay reviews are a great source of new product/service ideas.   Read all competitive reviews thoroughly as they will suggest to you how to create new products and services and better satisfy marketplace shoppers.   It’s free and valuable product and competitive research.
  1. Marketplaces are benevolent dictators. Whether it’s Amazon, eBay, Rakuten, Sears, or New Egg they all have their systems/rules that the sellers must comply with. You must sign their contract; follow their inventory/fulfillment procedures, live with their returns and payments policies, etc.   This is a significant administrative burden/cost.  That being said, there are a myriad of ways to work their systems to your advantage and automate administrative processes to reduce your selling costs.
  1. Selling on Amazon is a full time job. The DM maven Ron Popeil maxim of “set it and forget it” does not apply to selling when it comes to marketplace selling.   Marketplace selling requires minute-by-minute monitoring and management.   It requires smart thinking, instant decision-making and constant oversight.     Also, remember, not to re-invent the wheel. Learn from the experience of other B2B sellers and software providers.
  1. Marketplaces are re-shaping B2B distribution as we know it. We strongly believe that B2B marketplaces can only be ignored at your peril. Many B2B sellers are fearful of Amazon competition and have tried to avoid “playing the game”. Others have embraced We believe that the market power of Amazon is so big it can no longer be ignored.   Amazon, eBay, Sears, NewEgg (all of which have dedicated B2B marketing staff) and others are changing the structure of the B2B distribution world and you must learn how to play the marketplace game or be relegated to the competitive sidelines.
  1. Opportunity Abounds. You only have to look as a far as all the new online competitors in your industry who have grown from zero to millions in the last five years to know that many companies are doing very well on the marketplaces.   Several of them are our clients and I am always amazed when I learn that a company that did not exist 5 years ago now has sales of more than $30, $40 or $50M.   What are more impressive is the variations of the new marketplace selling business model.   It seems like no two are exactly the same.   Suffice it to say, creative, young entrepreneurs and established companies alike are doing very well in this space and opportunity abounds.
Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

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2014 Trends for B2B Catalog Marketers.

2014 will be a big year for B2B Multi-Channel Marketers

With the New Year off to a roaring start it’s helpful to pause and look at the road ahead. Much has happened in the last two years and the pace of change shows no sign of slowing in 2014.  If you are a B2B multi-channel marketer here are 10 things to think about….and, better still, take action on in 2014.

1. Product and service differentiation will again become the focus. “You are what you sell” becomes more and more important in today’s online world of instant information, competitive shopping and supplier access. Marketing teams will spend more time on developing/testing new products and services – the only real tangible differentiators. The pendulum will swing back towards real product innovation from new online marketing tools.

2. New and valuable content will drive mobile application and use. Just having a mobile site will become secondary. Providing educational/training content and applications via mobile to customers “in the field” will drive new customers and retention.

3. The process of market disintermediation will continue as more and more manufacturers sell direct via online marketplaces. Amazon Supply, Ebay and Google will lead these efforts. In addition, vertical marketplace players like Global Industrial and Staples will become increasingly important. Also, manufacturers, increasingly, will take direct control of online content for their products, not the online distributors/sellers.

4. Like mosquitoes in the summer, “Net Knats” will continue to proliferate. They buy products from distributors and wholesalers but will never take possession. They will rely on their wholesaler’s drop ship facilities, have low costs/overheads and take only a 5-10% margin. They will look for fat margin lines to exploit and your best selling product may be next.

5. Amazon and Ebay will expand their B2B SKU offerings…and there will be no stopping them. Look for their B2B SKU offerings to exceed 2 million in 2014. Their “one stop shopping” advantage and superlative delivery and online services will continue to grow. They are adding sales/tech support too.

6. Traditional B2B distributors will falter and fail. It will become increasing difficult to survive when your offering is mostly (if not all) distributed products. Branded, easy to find and buy items (like MRO tools, electronics and office supplies) will be hardest hit.

7. Customers will increasingly rely on other customers for purchasing counsel and advice. The lines of “customer to customer” communication will continue to grow with social media and vertical associations and buying groups. Both manufacturers and competitive B2B distributors will need to co-operate to manage (not control) this increasingly important customer influence.

8. The age and education of your buyer will markedly change the way they research, shop, buy and communicate with B2B sellers. We suggest looking at the behavior of your house file based on age segments and tracking evolving trends over time.

9. Email, online advertising, paid search and other online forms of promotion will continue to increase although their marginal effectiveness will soften as more dollars chase the same customers in the same media channels. Marketers will come to understand that telephone/people relationships are key to continued customer understanding and loyalty as the use of new technologies (one after another) evolves.

10. Survival will require significant change. Sometimes this will be painful. In order to avoid becoming irrelevant traditional B2B direct marketers must change rapidly. Taconic change is hard to achieve within the existing organization and culture. This is exacerbated by the fact that many organizations are reluctant to risk change until they must. Traditional B2B distributors threatened by emerging business models would be well advised to consider sponsoring competitive start-ups designed to compete with existing business models and/or acquire emerging companies based on new business models. Many leading companies now operate multiple brands designed to function in different channel with lower cost structures.

Lots to think about. As always, focus is key. Good Luck! Call if you need help.

All my very best for the New Year!

 

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

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